Wednesday, October 31, 2012

Here are 4 big energy issues that the election will decide that will impact natural gas, renewables, coal, energy efficiency.

1. The Natural Gas Act or Pickens Plan that would increase the use of natural gas in transportation has been stalled in Congress. Governor Romney opposes it, and the President supports it. It's dead if the Governor wins and has renewed life if the President is re-elected.

2. The EPA air toxic rule for power plants that is scheduled to take effect January 2015. Governor Romney promises its repeal, and President Obama obviously supports it. If it is repealed, more coal will be consumed, but about 1 trillion cubic feet less gas per year will be used to make electricity. Natural gas plants meet the requirement, but old coal plants without modern pollution controls do not. This issue alone could well impact the price of natural gas.

3. The Wind Production Tax Credit that expires this year. Governor Romney has promised to not extend it, but the President supports an extension. Without the production tax credit extension, 2013 new wind capacity falls to about 2,000 megawatts or less.

4. The Auto fuel efficiency standard that has been raised twice by President Obama. Governor Romney has promised to repeal the latest and highest 2025 standard. The difference represents a substantial change in US oil consumption over the next decade.

These four issues alone will impact substantially energy production, energy consumption, market shares of fuels, and the price of fuels. Elections have consequences.

"The climate has already changed" is what I say, when I am frequently asked about climate change. Moisture in the air is up 4%. Average temperatures are up. The ratio of record highs to record lows continues to increase, with record highs being set more than twice as often as record lows over the last decade. Growing seasons have changed by days and weeks. Sea levels are up and rising. The climate has already changed.

And because the concentration of heat trapping gas continues to rise in the atmosphere more change is ahead. Denying current facts and reality is a poor way to prepare for the future.

In fact, since 2008, the US has had an historic energy boom that includes fossil fuels, biofuels, wind, solar, and energy efficiency. As a result of intense competition with gas, US coal production has dropped but that drop has been lessened by record levels of coal exports in 2011 and likely again in 2012.

Non-hydro renewable energy is booming too. Wind generation has more than doubled since 2008 and will soon supply more than 4% of US electricity. Solar will reach 7,000 megawatts by the end of this year or 14-times the 2008 capacity. Ethanol is now providing the equivalent of 10% of our gasoline volume. Biodiesel is setting record production amounts. And we are using our energy more efficiently than ever.

Is America better off in terms of energy today than 4 years ago? Enormously so.

The credit for that goes mainly to the private sector, the companies, the men and women who drilled the wells, built the wind farms as well as planted, raised, and harvested the corn that became ethanol. But the federal government too did two things well.

First and very importantly, the federal government did not get in the way, with the exception of the moratorium that followed the awful BP oil disaster. Second, Uncle Sam and some states provided smart policies that led to more energy production and conservation. The historic fuel efficiency standards for automobiles, much bigger state level energy efficiency programs, and increased appliance efficiency standards are just some of the measures that have accelerated America's improving energy efficiency that is a cornerstone to our energy security and competitiveness.

Of course, at least two notable energy policy failures are part of the record of the last 4 years. Not passing the Natural Gas Act or the Pickens plan and not extending the wind production tax credit remains huge missed opportunities that will be decided by the Presidential election.

Governor Romney opposes both the Natural Gas Act and the wind production tax credit, while the President supports both. Further, Governor Romney promises to repeal the fuel efficiency standards for automobiles that have been raised twice in the last 4 years and that has meant that a new car bought today is typically 20% more fuel efficient than one bought in 2008. Governor Romney also promises to repeal the EPA mercury or air toxic rule that may go into effect in 2015 and that favors natural gas, nuclear, renewable, and the many coal plants with modern pollution controls.

Elections have consequences and that will be so with energy. Today America is in an energy boom; energy efficiency is increasing rapidly; oil imports are falling substantially; coal, gasoline, and diesel exports are at record levels. Finally our level of energy independence is at the highest level in more than 20 years, with more than 83% of the energy consumed in the US is produced right here.

Though Pennsylvania has no seashore and so no ocean surge damage, Sandy knocked out power to as much as one-third of Pennsylvanians at some point. In the Philadelphia area, approximately 60% of the population lost their electric service. And by sundown yesterday, more than 20% of Pennsylvanians were without power and in the dark and cold.

In terms of power outages, Sandy may rank among the top three most destructive storms of all time in Pennsylvania. Sandy's sustained winds follows Irene's pounding rains in 2011 that caused massive flooding to make it two years in a row that Pennsylvanians have suffered enormous storm damage. Yesterday, Pennsylvania did not dodge a bullet, as some suggested, but was hit with an historic one-two storm punch.

While utility electricity crews are working feverishly to restore service in Pennsylvania and across the Northeast, the damage is so widespread and severe that full restoration of service to all customers is almost certainly going to take close to a week. The frequency and severity of storms and outages raise important questions about the hardening of Pennsylvania's electricity infrastructure to decrease damage and its investments in flood protection.

Facts of nature are that the atmosphere contains 4% more moisture as well as land and water temperatures are up. Those are ingredients for severer weather ahead. We must be better prepared or the storm economic costs will continue to escalate, as they already have.

Tuesday, October 30, 2012

Sandy joins a long-line of storms that have put millions of people in the dark, as the electricity distribution system remains brittle to wind, ice, and flooding. Restoration of service will take hours at the least and can drag on for days. And once restored, it is only a matter of time until the next destructive storm hits.

Bill Finch is an entrepreneur that sells "plug-and-play" solar and wind generation systems, with battery storage, that ends the painful experience of losing electric service. www.Altern-Energy.com. He told me recently at the celebration of the opening of Pennsylvania's largest solar farm that his business was doing well.

Sandy may well have pushed more grid-power customers to give Bill a call. His number is 484-593-4262.

With gas displacing so much coal generation in 2012, the headlines have painted 2012 as a bearish year for US coal. And, indeed, coal generation's US market share will decline to levels well below 40% and not seen in decades.

But low coal demand in the US is a unique story, authored by the amazingly low US natural gas prices. Around the world coal consumption booms, with coal providing a higher portion of the world's total energy than anytime in the last 40 years.

The global coal consumption boom creates opportunity for US coal companies to increase exports. And it is an opportunity not lost.

This year US coal exports will break a record set in 1981. www.eia.gov/todayinenergy/detail.cfm?id=8490. Thirty-one years ago the US exported 113 million tons of coal, but EIA predicts the US will export 125 million tons this year, smashing the previous record.

Booming coal exports, combined with more than 2,200 megawatts of new coal plants coming on line, means that all the news is far from bad for the US coal industry during 2012.

Monday, October 29, 2012

Despite the headlines, the US coal industry has some good news. Quietly, 2012 is turning out to be a good year for new coal plants.

The Federal Energy Regulatory Commission reports that 2,276 megawatts of new coal capacity began operating in the US during January to August 2012. See data at: http://www.ferc.gov/legal/staff-reports/aug-2012-energy-infrastructure.pdf. Nearly all of the new coal capacity is owned by monopoly utilities (often municipal or rural electric cooperatives) that have placed it in a rate base that captive retail electricity customers support with their electricity payments.

Indeed, more new coal capacity has opened in 2012 than was the case last year. From January to August 2011, 1,710 megawatts of new coal plants began operations. And new coal plant capacity was equal to nearly 20% of the nation's 11,866 megawatts of all types of generation that began operating in 2012 through August.

As a result of much greater capacity factors, the new coal capacity of 2,276 megawatts is capable of generating an amount of electricity approximately equal to 13,700 megawatts of solar and 6,825 megawatts of wind. At the end of 2011, the US had 3,536 megawatts of solar installed and will likely double that total to 7,000 megawatts by the end of this year. In addition, the US will have probably more than 55,000 megawatts of wind installed by the end of 2012.

Despite the impressive growth rate of solar, just the new coal plants built in 2012 will produce about twice the electricity as all the solar systems in the USA and about 13% of the electricity coming from all wind farms. The solar boom is real, but the comparison of solar's production to that of just the 2012 coal plants keeps its production in perspective.

Friday, October 26, 2012

For the first time, EIA is out with solar capacity data that includes solar systems below 1 megawatt. The results confirm several important things. First, EIA calculates total US solar capacity by the end of 2011 at least to be 3,536 megawatts. http://www.eia.gov/todayinenergy/detail.cfm?id=8510. That is a huge increase from the approximately 500 megawatts that operated as recently as 2008. The EIA data also uses Alternating Current as the unit of calculation and that produces slightly lower total number than if Direct Current was used.

EIA also estimates that the distributed solar or solar at customers' homes and businesses accounted for 2,500 megawatts of the 3,536 megawatt total. Distributed solar is especially hot and competes not against the competitive wholesale generation price but against the full electric rate that includes transmission and distribution costs that are often substantial.

While the solar boom through 2011 was significant, it is nothing compared to what is happening with solar installations in 2012. US solar capacity is likely to double again this year and exceed an extraordinary 7,000 megawatts by December 31.

Made possible by the shale gas boom low-priced electricity has caused a blossoming of the state's competitive retail electricity market and now hundreds of thousands of customers are shopping for electricity in Maine and saving money.

Specifically, the Bangor Daily News writes: "In a nutshell, fracking for shale gas has increased the natural gas supply, thus reducing its price for power plants that use it to generate electricity...the wholesale price of electricity in New England tracks the gas price."

In Maine, the price charged to non-shopping customers called the standard offer is a product that reflects power purchases over a three-year period. Current market prices are well below the standard offer product and so competitive electricity suppliers entered the Maine market and are offering savings of about 10%. Those savings are enough to have even many residential and small commercial customers to switch to competitive power suppliers.

The DOE puts US average daily production in 2012 at 10.9 million barrels per day and that will likely to go to 11.4 million barrels per day in 2013. Biofuel production of about 1 million barrels per day is included in that number.

By comparison Saudi production will probably be 11.6 million barrels per day. But whether produced in Saudi Arabia or America, oil is globally priced so this surge in domestic production has not produced huge oil savings for consumers. Global pricing is one of the many differences between oil and gas that is regionally priced and for which the domestic price has crashed due to the US shale gas boom.

The economic and national security benefits of the US oil and gas boom are enormous. Combined with booming biofuel production and energy efficiency measures that have caused oil consumption to 1999 levels, booming domestic US oil production has slashed oil imports to the lowest level in decades. That has cut our cash exports for oil imports by billions and that stimulates our economy.

Yet, the domestic oil boom has coincided with the years of the highest oil prices, because oil remains priced in global markets, unlike the regionally priced natural gas where booming domestic supply has crashed the gas price.

Pennsylvania is proving that a state can have the advantages of falling national unemployment and a massive gas boom but still create rising unemployment, if it makes enough mistakes on education, transportation, alternative energy, and tax policy. Pennsylvania's unemployment rate rose from 7.4% in May 2011 to 8.2% in September 2012. www.bls.gov/schedule/archives/laus_nr.htm#2011.
During this same period, America's national unemployment rate fell from 9.0% to 7.8%.

Since May 2011, Pennsylvania's unemployment rate has risen 0.8 percentage points, but America's has fallen by 1.2 percentage points. May 2011 is when Pennsylvania's unemployment rate stopped declining from the peak reached in 2009. It is also when the 2011-12 state budget that made massive cuts in higher education and K-12 public education and that failed to make necessary investments in transportation began to force huge lay-offs among teachers and local school tax increases. Pennsylvania has destroyed approximately 19,000 education positions in 2011 and 2012.

Pennsylvania's terrible economic performance since May 2011, while the nation created millions of jobs and cut substantially its unemployment rate, has ended the decade long period during which Pennsylvania had an unemployment rate below the national average. As of September, Pennsylvania's rate of 8.2% was 0.4% higher than the national rate of 7.8%.

How could Pennsylvania mess up so badly? How could Pennsylvania not have an unemployment rate below the national average, especially given the gas boom?

The Marcellus gas boom is real and lasting. It is a major boost to Pennsylvania's economy. But Pennsylvania has a massive economy that must provide about 6 million jobs to its people to have low unemployment. Gas alone was never going to be enough to do that.

Gas alone most certainly is never going to be enough to compensate for terrible decisions about education, transportation, health care, alternative energy, and tax policy that destroy investment, kill jobs, and make Pennsylvania return to the bad old days when it always had unemployment rates higher than the national average.

America has 104 nuclear units and up to 25% of them have operating costs above competitive wholesale market prices (See the prior post for link). The New York Times reported on Tuesday that a quarter of the nation's nuclear units have operating costs of about 5.1 cents per kilowatt-hour, when annual capital costs are included. And many wholesale markets have been averaging a market price of 5 cents per kilowatt-hour or less.

Operating costs of 5.1 cents per kilowatt-hour and market prices of 5 cents equals a nuclear plant losing money by running! For those nuclear plants not in the comfortable nest of a non-competitive, monopoly utility rate base, the high costs of operating and low market prices may mean closure.

And before someone says that President Obama has a war on nukes, let's remember what is putting at risk the continued operation of up to 25% of the nuclear fleet is their high operating costs and low market prices for electricity caused by the shale gas boom, booming renewable energy supply, and slack electricity demand.

The closing of Kewaunee is made much more telling by the fact that it's not one of the nation's 5 most troubled nuclear plants. Nor close to that level of distress. It is operationally excellent, had just been relicensed in 2011 for an additional 20-year period, and had been bought in 2005, when it was understandably judged to be an attractive asset.

Kewaunee is a reminder that even a well run nuclear plant has high and annual capital costs of up to $70 million. Kewaunee is proof that some merchant nuclear plants lose money when power prices are at 5 cents per kilowatt-hour. The NYT article that is an excellent piece of reporting says that a quarter of nuclear plants spend up to the equivalent of 5.1 cents per kilowatt-hour just to produce a kilowatt-hour. Ouch! Ouch! Ouch since many power markets have been below 5 cents per kilowatt-hour for the last 18 months or more.

Kewaunee is another indicator that it is not chiefly EPA rules that are stalking old power plants across America but Adam Smith and market forces. Let's remember that this nuclear plant emits no air pollution and complies obviously with all EPA proposed air rules. It's closure will almost certainly mean more not less air pollution.

Low-power prices created by the shale gas boom, booming renewable energy supply, slack electricity demand and competitive power markets are closing Kewaunee. For sure Kewaunee would not be closing but for two things--the shale gas boom that has cut as much as 5 cents per kilowatt-hour off wholesale market prices since 2008 and the establishment of competitive power markets in which merchant plants compete daily to be dispatched.

The Kewaunee nuclear plant must compete each day for its revenue. It is not comfortably lodged in a monopoly utility's rate base, where captured ratepayers are forced to pay for the plant, no matter how its costs compare to competitive market prices. Instead Kewaunne gets the market price and not a rate that recovers all its costs plus adds on top of those costs about a 10% after tax return. Kewaunee were it in the rate base of a monopoly utility would not be closing.

Competitive power markets are strict disciplinarians, and Kewaunne just could not compete. This is a stunning change of fortune for the nuclear industry, since the assumption that a well-run nuclear plant could always keep its production costs below the market price is now proven false.

Low-power prices are not only blocking expensive new nuclear projects but also now closing operationally excellent plants that have substantial sunk costs. That is a very big energy story, indeed!

The 6 new-gas fired power plants represent billions of dollars of new investment, thousands of construction jobs, and thousands of megawatts of new, efficient, much cleaner generation. They are proposed in counties like Lawrence, Bradford, and Westmoreland, are scheduled to begin operations in 2016, but may or may not be actually completed.

Key factors determining how many of the 6 plants actually get built will be whether gas prices remain competitive with coal, whether or not old plants that have announced their retirement actually do retire, and demand for electricity. The new gas plants that do come on line will be much cleaner than those that they replace so the birth of them will bring better air and public health too.

Coal's generation market share hit bottom in April, 2012, when it supplied 32% of America's electricity, and when natural gas fell to $1.80 for a thousand cubic feet. As gas prices and demand increase, coal generation recovers market share. www.eia.gov/todayinenergy/detail.cfm?id=8450. By August coal provided 39% of the nation's power.

Natural gas prices are currently about $3.50 for a thousand cubic feet or 95% higher than in April. But despite the rise in gas prices that is helping coal to regain lost market share, coal is certain to fall below the 40% market share mark for all of 2012. Indeed, this year will be the lowest market share for coal in decades.

What will next year bring for coal? The market share for coal in 2013 will be higher--possibly back to 40%--for the simple reason that gas is likely to higher over the course of 2013 than it has been throughout 2012.

Tuesday, October 23, 2012

Mirror, mirror on the wall who is the fairest shale gas play of them all?

Marcellus, you are the fairest of them all. That's the conclusion of Standard & Poor's Ratings Service. www.standardandpoors.com/ratings/articles/en/us/?articleType=HTML&assetID=1245342008525. The Marcellus shale gas is the lowest-cost to produce shale gas, generating 12% return on investment for dry gas and 30% for wet gas, assuming a gas price of $3.50. Of course, returns have been lower in the last 12 months but were considerably higher before then when prices were consistently above $4 for a thousand cubic feet.

Of those rates of return, Standard & Poor's writes: "These rates of return are significantly higher than for the other key gas shale plays, including the Haynesville, Fayetteville, Barnett, Woodford, and Eagle Ford gas, due to the lower finding, development and production costs associated with the Marcellus."

The Marcellus and Pennsylvania have a major competitive advantage compared to other shale plays. That pretty well says it all.

A new Pew Research Poll shows that an increasing number of Republicans accept climate science and believe in global warming. Currently, 48% of Republicans believe in global warming, and that number is up sharply from just 35% in 2009 and 43% in 2011.

Belief in global warming is rising among Democrats and Independents as well. It's not quite unanimous in the Democratic party, but 85% of Democrats believe in global warming and 65% of Independents do too.

Monday, October 22, 2012

Among the many misrepresentations and fabricated charges about gas production, one of the ugliest and most misleading is that the whole shale gas boom is a Ponzi scheme. The NYT is especially responsible for injecting this damaging nonsense into the public mind, though Rolling Stone Magazine loves too the shale-gas-ponzi-scheme frame. As a result, many good people are quite convinced, and some fervently hope, that the gas will run out in a matter of years and that companies have been cooking the reserve books.

Over the weekend, the Associated Press wrote that new studies of the Marcellus, using actual production numbers, find that it has more than twice the gas stated in the most recent government estimate.www.abcnews.com/US/wireStory/reports-marcellus-reserves-larger-expected-17525932#.UIC. ITG Investment Research estimates that the Marcellus contains 330 trillion cubic feet of gas, or more than twice the 141 trillion cubic feet estimated by the Energy Information Administration.

The AP notes that the EIA estimate of 141 trillion cubic feet was a major reduction from its previous estimate of 410 trillion cubic feet and was widely reported, including of course by the NYT, and by the AP. Here is what the AP further reports:

"But that lowered estimate doesn't correspond with actual well production, said Nikhanj [ITG's head of investment research]. He said their analysis shows that the Marcellus contains about 330 trillion cubic feet of gas, more than double the size of the next largest field in the nation, the Eagle Ford in South Texas." Moreover, other analysts have placed even higher reserve numbers on the Marcellus than ITG's 330 trillion cubic feet.

In addition, Standard & Poor's Rating Services issued a report on October 15th, 2012 that says:
"The U.S.natural gas industry is rapidly evolving, largely because of shifting supply dynamics. The Appalachian region in the Northeast is one of the main proponents of the change, as its Marcellus shale could contain recoverable resources equal to almost half of the country's proven natural gas reserves in the U.S."www.standardandpoors.com/ratings/articles/en/us/?articleType=HTML&assetID=1245342008525.

Actual production from the Marcellus is at or above predicted levels and is so big that it alone is reshaping energy markets The gas reserve just in the Marcellus is massive. Shale gas production now approaches 40% of all gas production in the US. Record levels of gas were produced in 2011, and a new record may be set in 2012, despite the collapse of the gas price.

Like it or not, the Marcellus alone has enough gas for at least 50 years, and probably longer, at expected rates of development and production. There is no Ponzi Scheme. You can read about that truth in the AP.

But what about the New York Times who gave such prominent life to the Ponzi scheme ugliness and falsehood?

Unfortunately, though the NYT has unending space for stories that cast gas in a controversial or negative light, and ran another such story this weekend, the NYT will not find any space for the truth about gas reserves, because it is a purely positive gas story. And it will never say that its sensational reporting about a shale gas Ponzi scheme was as false as its reporting that weapons of mass destruction were in Iraq prior to the 2003 invasion.

Iraqi WMD and gas Ponzi schemes are two ghosts haunting the NYT and are rooted in two reporters that the NYT allowed to go rogue.

For my Republican friends, here's your morning, warm political milk: Gallup yesterday had the President trailing Governor Romney by 7 points among likely voters and 3 points among registered voters. If Gallup is right, Governor Romney will be President, as 7 point national leads don't collapse in two weeks.

Not to pour too much cold water on my Republican friends' Gallup-fueled hopes, but you should know that Gallup had George W. Bush 13 points ahead on October 27, 2000 among likely voters and was among the worst polls in predicting the final margin in 2008.

For my Democratic readers, here's your morning, warm political milk: yesterday's Investors Business Daily tracking poll had the President leading the Governor 48-42 or up 6. If the IBD/TIPP poll is right, President Obama will be re-elected.

While I find it credible that President Obama would be at 48 points, I don't believe that Governor Romney is as low as 42.

And for anyone who is still undecided, I offer you Sunday's NBC/Wall Street Journal poll that had the race tied at 47 among Likely Voters, though the President leads 49-44 among registered voters. I would also offer you the Public Policy Polling number of 48-48 and the Reuters-Ipsos tracking poll that had the President at 46 and Governor Romney at 45.

So, if you are undecided, you can still make a difference by making up your mind, but you are down to 15 days to do so.

Out of that jumble, where do I think the race stands? My review of the polling and their internals, where available, leads me to conclude this race is all about turnout. Gallup and Investors Daily are likely both wrong, since both paint this race as substantially controlled by either the President or the Governor. They are outliers among the polls, and my all knowing gut says they are wrong too.

For six months, the race has been structurally 47-47, with independents capturing 2 per cent of the vote. That leaves 4% undecided. And the average of national polls, as of yesterday, confirms this view of where the race still stands

Every vote may well count, as this race looks like 2004 or even 2000. While not probable, it is also possible that the winner in 2012 may lose the national popular vote or that third party candidates in Virginia and Colorado tilt those states to either President Obama or Governor Romney and so the election.

It is also possible that 2012 might become the second election out of the last 4 where the electoral college winner lost the popular vote. In 2000 Gore won 500,000 more votes but Democrats swallowed the bitter pill of defeat. Perhaps, if the President wins an electoral college majority but loses the popular vote, bipartisan agreement might emerge to abolish the electoral college and that would be a long overdue, positive change.

The Presidency in 2012 comes down to TURNOUT. Who votes in 12 or less states will decide. And hopefully the candidate with the most votes will win.

Friday, October 19, 2012

Ending nearly a 10-year period, during which Pennsylvania's unemployment rate was always below the national average, Pennsylvania's September unemployment rate was higher than the national unemployment rate. Pennsylvania's rate was 8.2% in September, compared to the national average rate of 7.8%. www.bls.gov.

Pennsylvania was one of only 6 states in September that had rising unemployment. During September, forty-one states saw their unemployment rates fall, and 3 others had no change.

For nearly all of Governor Rendell's first term and for all of his second term, Pennsylvania's unemployment rate was well below the national average and often around 1% below the national average.

As of September 2012, the Commonwealth unemployment rate rose another 0.1%, and the rate was a full 0.4% higher than the national average. Pennsylvania's rate now has risen for four straight months.

The success of corn ethanol and its displacement of oil is one reason why the nation's oil consumption peaked in 2007 and is now lower than in 1999. It is also one reason why US oil imports have fallen substantially since 2005.

Renewable energy is big business around the world. In fact, it is bigger business than building new fossil fuel generation capacity and by quite a bit.

Global investment in renewable energy soared in 2011, setting a new record of $257.5 billion and exceeding by $40 billion the amount invested in new fossil fuel capacity. http://www.worldwatch.org/continued-growth-renewable-energy-investments. Investment was up 17% from 2010, another strong year for renewable energy investments around the world, when $220 billion was put into new renewable energy projects.

Solar had an extraordinary year in 2011 when it attracted $147.4 billion; wind followed in second place at $83.8 billion. Biomass and biofuels attracted $10.6 billion and $6.8 billion respectively. Solar's global investment boom is driven by a price decline of about 50% in 2011.

China led the world with $52 billion of renewable energy investments and the US was second at $51 billion, during 2011. Uncertainty about the extent of future investments in the US has been created by conservative Republican attacks on renewable energy, with the issue of extending the Production Tax Credit for wind a flash point.

But global investment trends into renewable energy are so big that renewable energy's prospects for remaining a global economic powerhouse are bright, no matter the outcome of political battles within the US during 2012.

The C-Max is the most fuel efficient plug-in hybrid currently available, beating the Prius plug-in for the top spot. The C-Max is rated at 109 mpg in the City and 100 mpg overall.

Ford calculates that a typical owner will save $7,000 in five years in fuel costs at today's gasoline prices. Owners are also doing two things that many cherish--cutting their ties to imported oil and wars for oil as well as slashing their transportation environmental footprint.

Thursday, October 18, 2012

All energy choices have strengths and weaknesses, and all have impacts on the environment. That is true of biofuels too.

For example, ethanol is completely domestic, and we don't fight wars to access the Iowa corn crop. Quite a strength.

But 40% of US corn and 14% of our soybean production is now consumed to make biofuels, a lot of biofuels. Corn farmers have been big winners from booming ethanol production. But not all impacts of ethanol are positive for all Americans.

Ethanol production increased from 13.3 billion gallons in 2010 to 13.9 billion gallons in 2011. Production is equal to nearly 10% of US gasoline consumption. http://www.eia.gov/biofuels/issuestrends/. Biodiesel production in 2011 was sharply up from 2010 and 2009 and nearly reached 1 billion gallons.

Corn farmers have been big winners from booming ethanol production, raising their incomes and the value of their land. But not all impacts of ethanol are positive. Diverting 40% of the corn crop to biofuels raises food prices, though by how much is contentious, raises feed costs for some farmers, and impacts water.

Corn consumes lots of water and run-off from corn fields can pollute waters. Indeed, the impact of corn ethanol production on water is likely greater than gas production--one more example of how the massive focus on gas drilling as supposedly the greatest threat to water is mistaken.

How many times do you have a guaranteed way to save $300 per year with one phone or web contact? Not often. But electricity competition is offering savings up to $300 to residential electricity customers of Duquesne Light, the electric utility serving the Pittsburgh region.

Here's the math. Current regular residential customers of Duquesne Light are paying $69.23/month for electricity generation or 9.89 cents per kilowatt-hour. There are 26 companies competing for their business.

To name just three, Direct Energy will provide the same service for $51.80/month; First Energy for $44.45; and Just Energy for $43.75/month. Monthly savings can exceed $25. These real bargains are partially the result of sharply lower natural gas prices that have yielded greatly reduced wholesale electricity prices during 2012 that competitive suppliers are now passing through to retail customers.

Indeed, electricity generation prices offered by competitive suppliers in the Pittsburgh region are about 2 cents per kilowatt-hour or 25% lower in nominal dollars and 70% lower in constant or inflation adjusted dollars than what Duquesne Light charged for generation in 1996, the year Pennsylvania enacted the Electricity Competition and Customer Choice Act.

In the Pittsburgh region, customers can also switch to 100% Pennsylvania wind power supplied by Community Energy and save money, compared to staying a generation customer of Duquesne Light.

Customers in nearly all parts of Pennsylvania can save money by shopping for electricity or purchase green power. It's easy to do and more than 1.86 million Pennsylvania electricity customers have done it. To go power shopping, take a look at www.papowerswitch.com and at www.choosepawind.com.

Wednesday, October 17, 2012

Times change and so do positions. When Governor Rendell signed on October 26th, 2010 a moratorium on further leasing of state forestland, then Attorney General Corbett's campaign said that Tom Corbett would rescind the moratorium promptly if elected.

Just a bit more than a month into office, on tuesday, February 23rd, 2011, the Corbett Administration repeated its intention to lift the moratorium and authorize more leasing of state forestland for drilling. http://articles.philly.com/2011-02-23/news/28620659_1_dcnr_secretary-john-quigley-drill-for-natural-gas-marcellus-shale. "Governor Corbett plans to lift the moratorium imposed in October...it's just a matter of time his spokesman said Tuesday." From there, and the repeated statements indicating the imminent demise of the moratorium , fast forward to yesterday, when the moratorium was still in force and got unexpected support from Governor Corbett himself.

In addition to his evolving position on drilling in state forests, the Governor also stated that there were no plans to drill in state parks. Yet, a great deal of state park acreage sits atop mineral rights that the state does not own. Moreover, Pennsylvania has not enacted legislation that could protect those state parks from gas drilling, though legislation that would do so has been proposed in the General Assembly. As a consequence, whether drilling happens in state parks is not fully resolved by the wishes of the Governor.

Through all the tugging and pulling, the Rendell gas drilling leasing moratorium in the state forests will be two years old this October 26th. The cynics who predicted that Governor Rendell's action would survive about 80 days have been proven very wrong.

The most energy secure country is Mexico, reflecting its large domestic energy production and comparatively small demand, while the United Kingdom, Norway, New Zealand, Denmark, and Australia in that order are spots 2 to 6.

And what would be the least energy secure country? Putin knows the answer. It's the Ukraine, followed by Thailand, South Korea, Netherlands, Brazil, Italy, Turkey, and Japan.

Rising oil, gas and non-hydro renewable energy production combined with increasing energy efficiency in the USA means that the US is getting more energy secure and not less. Indeed, the US produces currently about 83% of the total energy that it consumes.

Despite this increasing energy self-sufficiency, oil is priced in a global market and it has been persistently expensive. High oil prices for 100% of the oil consumed here and our need to import about 42% of all our oil needs remain the two biggest examples of US energy insecurity.

Passing the Natural Gas Act, boosting electric vehicles, increasing oil efficiency, and raising biofuel production remain all necessary responses posed to our national and economic security by high oil prices and imports.

New wind construction faces one major threat in 2013, and its not gas. Gas-fired electricity is projected to decline 10% in 2013, as a rising gas price causes gas to lose market share to coal-fired generation. Instead the one threat endangering wind projects in 2013 is the expiration of the Production Tax Credit (PTC) at the end of 2012.

Despite the battle over the wind PTC, with Governor Romney favoring its expiration and President Obama favoring its renewal, actual electricity production by America's wind farms is projected by EIA to be 13% higher in 2013 than in 2012, reaching 420 million kilowatt-hours per day. That will be enough electricity to supply about 15.5 million homes. www.eia.gov/forecasts/steo/tables/?tableNumber22=#.

The increased production in 2013 will mostly result from a full year of operations of the 10,000 megawatts of new wind farms being completed in 2012. In addition, some new wind will be built in 2013, even if the PTC is not renewed, but estimates put 2013 without the PTC at around 2,000 megawatts, a new build number that would be the lowest in many years.

If wind production increases by 13% in 2013 and gas declines by 10%, as the EIA projects, that will be yet one more fact demonstrating that gas is not killing renewable energy. After all, wind will increase, even as gas generation retreats. And the slow down in new wind construction likely in 2013 would be caused by the expiration or late renewal of the PTC.

Even with 2013 right around the corner, the recent EIA projections for 2013 production from coal, gas, and wind may still prove wrong. But the forecast is built on the established facts that coal and gas compete intensely for market share and that already constructed wind farms run no matter what are the prices of coal or gas.

Wind farms run no matter what the prices of coal or gas are, because the zero-fuel cost of wind generation and wind's other operational cost advantages means that wind generation has the lowest production costs of all generation sources, with the possible exception of solar. Wind generation will produce power at a cost almost always below the wholesale electricity market price and will be profitable in nearly all hours of the year. The same cannot be said of gas and coal plants.

Coal and gas power plants have much higher production or operating costs than wind and most other renewable generation sources. They will run or not, depending primarily on the price of their fuel and the price of electricity.

The fact that wind farms low production costs mean that they run once built is why wind's generation market share will tend not to decline or be as volatile as coal or gas. From year-to-year the same wind farms will operate at approximately the same production levels. But gas and coal plants actual production can vary substantially year-to-year, depending on the fuel prices of each, and so the generation market shares of both will follow to some extent price changes in natural gas and coal.

Next year's rising wind and solar generation and falling gas generation, all in the same year, will be one more demonstration that attacks on gas for killing renewable energy are factually challenged!

Regular residential customers of Duquesne Light pay 9.89 cents per kilowatt-hour for generation or $69.23 per month (assuming 700 kilowatt-hours) but would pay 8.99 cents per kilowatt-hour for a 100% wind power product. Monthly savings are $6.29. While the Community Energy product is 100% Pennsylvania wind, the Duquesne Light product comes from conventional generation technologies like coal, nuclear, gas and about 4% renewable energy.

So why is Community Energy's 100% wind power product lower cost than the Duquesne Light default rate generation product? Timing of the electricity sourcing for each product is the main explanation. Community Energy's price reflects current market conditions, but Duquesne Light's default rate reflects power prices that existed about 2 years ago, when Duquesne Light last sought competitive bids for its "default supply" (power provided to customers who do not shop or switch). As a result, for customers of Duquesne Light, not shopping for power means both paying more and purchasing electricity with a bigger environmental footprint. A total of 26 companies are competing for the business of residential customers in the Duquesne Light service territory.

In addition to Community Energy's Pittsburgh area offering, other green electricity products are available in different parts of Pennsylvania. To get information about green power products as well as other non-renewable energy products, two electricity shopping guides can be found at www.choosepawind.com and papowerswitch.com.

At this point, if you want to pay less or pollute less, you should invest about 30 minutes to shop for power!

Monday, October 15, 2012

Science is an interactive process made rigorous through replication of results and critical examination of data and methodology. A methane leakage paper authored by scientists at NOAA and the University of Colorado and now a critical paper that refutes its conclusions provide are the scientific process at work.

In great technical detail (his paper is more formulas than words), Mr. Levi describes errors that in his judgment the NOAA/University of Colorado team made that led to erroneous conclusions of methane leakage rates in the 2.3% to 7.7% range. When corrected for the errors that Levi identifies, Mr. Levi calculates that the raw data measured by the NOAA/University of Colorado team is consistent with leakage rates of 1% to 2%.

As Mr. Levi notes, leakage rates of 1% to 2% is the most commonly accepted current range of methane leakage rates arrived at by measuring, estimating, and extrapolating leakages in the various parts of the process. The NOAA was limited to one place in one time period--on a non-shale development area of Colorado in 2008. But its conclusions stood in sharp conflict with the bulk of evidence on leakage rates and so is particularly important to understand, confirm or refute.

On twitter, Levi said his paper had been accepted for publication in April of 2012 and had been available to the NOAA/University of Colorado team for 7 months so far without their promise response to it forthcoming. When it arrives, assuming it will, the response will be important and examined closely.

Few things are more important to the global future of natural gas than having a good understanding of methane leakage rates and taking measures to reduce it further. On that score, the recent EPA natural gas air rules will cut further current leakage rates, and that is good news for natural gas and the environment.

The credibility of the Pennsylvania Department of Environmental Protection's water testing is a precious, fragile commodity. That is especially true in disputes about possible impacts of gas drilling on water supplies.

Performed by career civil servants in the DEP laboratory in Harrisburg, water test results in the last 5 years have annoyed drilling companies, homeowners, and environmental organizations. All sides have been made unhappy by one test result or another and have sometimes fallen prey to the temptation of attacking the messenger. And that alone is compelling proof that the numbers in the tests are honest.

Friday, October 12, 2012

The impossible sometimes happens. That is the lesson of the revolutionary changes in how electricity is generated in the USA since 2008.

Indeed, as of January 2008, not a single expert said that by 2012 gas and non-hydro renewable energy would increase their generation market shares by 51% and 76% respectively, while coal would lose 25% of its share. Those thoughts were not thought. They were impossible.

In 2008, coal accounted for 48% of electric generation but 36% in the first 7 months of 2012.

In 2008, gas provided 21.4% of our power and 31% in 2012 through July.

In 2008, non-hydro renewable energy generated 3.1% of America's electricity and now 5.4%.

These facts also underscore two critical points that are important in the fracking wars and a real understanding of America's energy choices. First, despite what some say repeatedly, the shale gas boom has not killed renewable energy. Instead, gas and renewable energy have boomed at the same time.

Among the multiple reasons why low gas prices have not done in renewable energy are that: (1) competitive electric generation markets favor low-production cost generation and renewable facilities are the lowest production cost units; (2) state and federal incentives for renewable energy work to attract substantial private investment and new capacity; and (3) the capital costs of building wind and solar have been slashed over the last 10 years.

A second critical point that the facts above demonstrate is the intense competition between gas and coal for market share. From 2008 through the first 7 months of 2012, gas gained about 10 percentage points of market share (21% to 31%). Gas's gain was coal's loss, as coal lost 12 percentage points (48% to 36%).
This coal-gas duel continues everyday, and rising gas prices make it likely that coal will recapture some of its lost market share during 2013.

Will coal continue to regain some lost ground after 2013? The price of gas will largely answer that question.

But, after the last 5 years of incredible changes like the shale gas revolution and plummeting solar prices, the only thing that can be said surely about the next 5 years within the electric industry is that little is impossible.

EPA's nitrogen oxide data tell a powerful tale and offer another example of why today often is better than the nostalgically remembered "Good Old Days." In terms of air quality, all of us are much better off today than 4 years ago and the pace of improvement is quickening.

Indeed, America is more rapidly than ever returning our air to a quality not breathed in 80 or more years. One marker of the wonderful cleaning of America's air is the decline of nitrogen oxides, a leading cause of human illness, and regulated by the Clean Air Act.

In 1970, total nitrogen oxide emissions stood at 26.8 million tons, with vehicles and electric power plants being the two top sources. From 1970 to 2000 nitrogen oxide pollution levels in this country dropped 16% or 4.3 million tons, an improvement but slow indeed.

From 2000 to 2008, nitrogen oxide pollution declined at a more rapid pace, dropping another 5.3 million tons or about 24%, in the 8-year period. By 2008 the annual nitrogen oxide emission as 17.2 million tons.

And the pace of the decline in nitrogen oxide levels hit top speed in the last 4 years. From 2008 to 2012, nitrogen oxide emissions fell another 5.5 million tons or another 32%. The total level is reported as 11.7 million tons by the EPA. All data is at: www.epa.gov/ttnchie1/trends/.

Today, power plants are no longer among the two leading sources of nitrogen oxide pollution. They have dropped to number 3. Vehicles and off-highway equipment rank 1 and 2.

All told America has cut its nitrogen oxide emissions by 15.1 million tons since 1970 or by 56%, while greatly expanding its population, cars on the road, and the amount of electricity consumed. For this important progress that benefits our health, environment, and economy, thank both the Clean Air Act and its standards and the private sector for making cleaner fuels like renewable energy and natural gas, installing pollution controls on power plants, building cleaner cars, and increasing energy efficiency.

So is the job of cleaning up our air finished? Huge progress has been made but there are still days when the air is unhealthy to breathe for many Americans. There is still too much mercury in fish. The clean up is not yet done. But we should recognize the progress made and finish the job.

Thursday, October 11, 2012

Judged by usage of gas and coal to make electricity, 2013 is shaping up to a bad year for gas and a good one for coal. And the price of gas tells the whole tale.

Since 2008, falling gas prices fueled a 45% surge in usage of natural gas to make electricity, but that bull run is projected to screech to a halt in 2013. www.eia.gov/forecasts/steo/tables/?tableNumber=22#. Gas prices rising from the 2012 depths also mean a 10% decline in gas generation during 2013, with daily gas-fired production projected by the EIA to drop from 3.4 billion kilowatt-hours to 3.06 billion kilowatt-hours each day.

The projected 2013 retreat in gas generation means a substantial rise in coal-fired generation. EIA projects that coal generation will increase 7%, rising from 4.187 to 4.475 billion kilowatt-hours per day. EIA is also predicting a 6% increase in carbon dioxide emissions from coal generation and a 1.9% increase in all energy-related carbon emissions in 2013.

Approximately 65% of America's electric generation comes from either coal or gas. How much of that 65% comes from either coal or gas is decided by intense competition between the fuels. That's the real choice in the real world for 65% of the generation market, and the price of gas substantially makes the choice between coal or gas.

With gas prices rising, 2013 will see rising coal generation and coal recapturing some of its lost market share. 2013 will also end a run of annually increasing gas-fired electricity generation and will be the first year since 2008 that America will get less of its electricity from natural gas than in the year before.

Some critics of gas production at least create the mistaken impression that there is no difference in the environmental impacts of gas, coal, and oil. Indeed, ignoring the different environmental impacts of the three fuels or even claiming falsely that gas is dirtier than coal is at the foundation of the effort to ban shale gas production.

Yet, in the real world, though gas is not pristine or perfectly clean, gas has much less impact than either oil or coal on water, air, or climate. Another stark reminder of this point comes courtesy of the still unfinished clean up of a 1.1 million spill of oil into the Kalamazoo river that happened in 2010. The spill led to massive damage to a stretch of the river and a difficult, expensive clean up operation that to date has required the removal of 200,000 cubic yards of soil. www.huffingtonpost.com/2012/10/03/enbridge-pipeline-spill-michigan_n_1936619.html?utm_hp_ref=green.

Gas displacing oil lowers impacts and risks to the environment and especially to water. Moreover, more gas and less oil is a recipe that is essential to our economic and national security.

Brattle predicts that 59,000 to 77,000 megawatts of coal plants will retire by 2016, if gas prices are around $4.30 in 2015 or roughly 20% of the nation's coal fleet and 7% of total, current US generation of all types. The latest estimate is about twice its previous number.

Brattle states: "Our new analysis shows about 25 GW [25,000 megawatts] higher retirements than the levels we projected in December 2010 due mainly to lower expected gas prices--despite the somewhat more lenient environmental regulations that we currently envision." See page 2 of the Executive Summary. So Brattle boosts its estimate of expected coal retirements, because much lower gas prices and lower power demand are powerful, negative factors that overwhelm regulatory concessions and flexibility for coal plants included in finalized rules.

Indeed, the number of actual coal retirements is highly sensitive to the price of natural gas. As of July 2012, retirements of 30,000 megawatts of coal plants had been announced, but Brattle finds that coal retirements would fall to as low as 21,000 megawatts, if gas prices are $1 per thousand cubic feet higher than its $4.30 modeled price.

Conversely, coal retirements skyrocket to as much as 141,000 megawatts or about 43% of the nation's entire coal fleet, if gas is $1 below the $4.30 mark.

Yesterday's spot natural gas price averaged $3.17. If prices stayed close to that level, the Brattle Group study concludes that an enormous 115,00 to 141,000 megawatts of coal generation would retire due to competition from gas.

The price of gas is the pivotal variable. Put simply, the price of gas is king!

From 2008 to first 7 months of 2012, non-hydro renewable energy has seen its market share of electricity generation increase from 3.1% to 5.4% of all electricity generated. Its market share has jumped 76%.www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_1_01. With hydro added, renewable energy now consistently provides 13% to 14% of America's electricity, an impressive, growing number.

During the same period of 2008-2012, natural gas has seen its generation market share jump from 21.4% to 31.1% or about 47%. The gains of gas have come at the expense of coal that has seen about a 25% decline in its market share. Unlike the 2 big winners gas and non-hydro renewable energy, coal, nuclear, hydro, and oil have either lost or maintained market share.

This data obviously offers no support for the assertion that gas would displace non-hydro renewable energy. Instead, both have enjoyed boom times.

Tuesday, October 9, 2012

For years air pollutants that cause illness have been reaching New Yorkers from out-of-state as well as in-state pollution sources. The same is true in Pennsylvania and virtually every part of America. Public-health-damaging pollutants include soot, mercury, lead, arsenic, nitrogen oxides, and sulfur oxides.

Soot alone is known to cause massive amounts of illness and premature deaths. Indeed, the public health literature has documented that lessening soot in the air extends significantly the life expectancy of whole populations. For example, in the Pittsburgh region, reductions in soot have added at least 10 months on average to the life of everyone living there.

Given what we know about air pollution does to public health, there is no doubt that it poses a major public health threat. To address this threat, key questions become: what are the major sources of air pollutants that damage health? What can be done to reduce the total air pollutants in our air? And what are the current trends? Part of the answer to these questions comes from the fact that natural gas emits no soot, mercury, lead, arsenic and much, much less of other air pollutants that damage health than oil or coal.

In addition to transportation, two major sources of air pollution in New York are out-of-state and in-state coal plants, with no or limited pollution controls, and burning heavy sulfur oil to heat buildings. Indeed, though New York City plans to transition from high sulfur heating oil to gas, the City still consumes large amounts of high sulfur heating oil to get through each winter, at the price of emitting substantial air pollution.

By contrast, gas-heated buildings or gas-fired power plants emit none or very little of the pollutants that cause human illness. Consequently, the substantial increase in gas to displace coal and oil inside and outside of New York has slashed air pollutants that cause illnesses and even premature deaths.

And let's remember these astonishing facts that the shale gas revolution has produced by sharply lowering the price of natural gas. In 2008, coal power plants provided 48% of our electricity but 36% so far in 2012. New York has increased its usage of gas to make electricity in 2012 by 21%, while reducing substantially the amount of coal generation in the Empire state. So far in 2012, coal accounts for just 4% of New York's electricity generation. And building owners are rapidly switching from oil to gas for heat.

Further major declines in toxic air pollutants have certainly taken place in 2011 and 2012, as more gas, renewable energy, and energy efficiency displaces coal and oil combustion.

All these facts lead to a question, has anything improved public health more in New York since 2008 than natural gas? Yes, scrubbers on coal plants help and so do more renewable energy and energy efficiency. Gas alone is not the full answer.

But gas substituting for coal and oil may be the single biggest source of air pollution reduction since 2008 and certainly is among the top three. And so, serious study of the public health impacts of shale gas production should include the large health benefits of less pollution delivered by more gas usage, before reaching conclusions about the public health impact of natural gas.

For the fact is that low-priced natural gas, made possible by the shale revolution, has slashed the amount of air pollution that every New Yorker and every American breathes!

Monday, October 8, 2012

The Empire state's appetite for gas grows, even as it extends its moratorium. In fact, after another big increase in gas-fired generation in 2012, New York generates substantially more of its electricity from gas than any other source and is using gas to nearly eliminate coal generation.

In the first 7 months of 2012, New York's gas-fired generation increased 21%, compared to the same period in 2011, and provided 34.6 billion kilowatt-hours of generation or 6 billion more kilowatt-hours more than in 2011. www.eia.gov/electricity/monthly/. Only Texas, California, and Florida generate more electricity from gas.

In addition to burning gas to make electricity, New York relies also on nuclear power and hydro, but both of those sources saw small declines in 2012. Nuclear power plants in New York provided the second highest amount of power in 2012 at 23.4 billion kilowatt-hours or down 2.3% compared to 2011. Hydro ranked third at 15.6 billion, down 1%.

What about wind and coal? Wind provided 1.8 billion kilowatt-hours, up 9% from 2011 and about 2% of New York's generation. In actual kilowatt-hours generated the wind increase and the hydro decrease were offsetting.

Interestingly and ironically, New York is displaying the same pattern of gas displacing coal as is seen around the country. Coal generation within New York declined from 7 billion kilowatt-hours, during the first 7 months of 2011, to 2.7 billion kilowatt-hours, from January to July of 2012.

In fact, gas generation increased 6 billion kilowatt-hours, while coal generation fell 4.25 billion kilowatt-hours. And it is gas that is displacing coal generation, and not renewable energy, that is displacing coal within New York in 2012. New York's combined renewable energy generation from hydro and non-hydro sources was almost exactly the same in 2012, as it was in 2011, since wind's modest increase was offset by a slight decline in hydro production.

As a result of the 21% increase in gas-fired generation in 2012, coal generation now accounts for less than 4% of the power generated within New York.

Even though its appetite for gas grows, New York recently announced that shale gas production would be delayed, until further study of health impacts of gas production could be completed. Inasmuch as the growth of gas has reduced coal generation to less than 4%, New York's study should include the health benefits of decreased air pollution coming from New York power plants and buildings, as a result of more gas being utilized, to displace coal and oil. Indeed, so far, New York's public health has been improved by its use of natural gas.

Temperatures have been setting all time record highs in Oklahoma in 2011 and 2012. High temperatures lower dissolved oxygen levels as well as promote algae growth. Perhaps Inhofe's commendable humor about his algae encounter is a precursor of new wisdom. At least, I can hope.

The Senator also recounts that his grand-daughter refused his encouragement to swim with him, as she said she didn't want to jump into the "green stuff." The Senator has a smart grand-daughter, and I encourage her to exercise the same caution about following his environmental, climate, and energy views, as she wisely did about his pleas for her to join him swimming.

At the outset, the Bloomberg article suggests, probably accidentally, that hydraulic fracturing, as distinguished from errors in the gas drilling phase, is linked to gas migration. Then the bulk of the piece focuses on whether Marcellus Shale gas itself migrated.

DEP's isotopic testing found that the gas that migrated was not Marcellus shale gas but thermogenic gas from a shallower formation--the Middle and Upper Devonian. DEP also documented high pressure readings at gas wells, certain design features, and other operational facts that supported conclusions that mistakes in the gas drilling phase caused gas from the Middle and Upper Devonian formations to migrate to 18 water wells. By December 2010, 14 of those 18 water wells had readings below the methane action level and that indicated efforts to stop the migration were working.

Bloomberg does end the piece by quoting Fred Baldassare, an expert on gas migration and isotopic analysis, who led the Pennsylvania DEP analysis in 2010 and who now is in the private sector. Fred says: "The molecular and isotopic evidence that I saw was that the gas in the water supply looked like the gas in the Cabot wells. It's doing more damage than good to keep denying that connection. Let's get past that."

EQT calculates that using gas slashes carbon dioxide emissions by 20% to 30% as well as nitrogen oxides, sulfur oxides, and particulates. It also cuts trucking delivering diesel to drilling rigs and saves $400,000 per year.

This is a powerful illustration of how using more gas to displace oil is good for pocketbooks and the environment.

Thursday, October 4, 2012

Though its environmental impacts are much less than oil or coal, reducing the environmental footprint of gas production further is certainly possible. Some improvements increase costs but reduce risk. But still other ways of reducing the impact of gas on the environment actually cut costs. They are outright cleaner and cheaper.

Substituting natural gas for diesel fuel to operate drilling rigs is a powerful example of cleaner and cheaper. Brian Murphy of Ensign Energy Services calculates that running a drilling rig on gas costs $1,322 per day, compared to $4,653 for running on diesel. fuelfix.com/blog/2012/09/28/natural-gas-wins-place-as-oil-field-fuel/. The daily difference is $3,331 and ads up to $1.3 million per year, according to Murphy.

And using more of your own product is good business for any industry. David Ross, Director of Business Development for Pennsylvania-headquartered EQT, states in the linked to story that the opportunity for using gas in drilling rigs is bigger than that presented by long-haul trucks, ferries, and locomotives combined. Wow!

Last Sunday's NYT Book Review included this: "In 1932, when Thurmond won his first election to the South Carolina Senate, Franklin Roosevelt carried the state with 98 percent of the vote." See David Oshinsky's review of "Strom Thurmond's America."

That fact is an astonishing reminder of a time and a place where African Americans, who were loyal supporters of the Republican Party, the party of Lincoln, were disenfranchised systematically and ruthlessly. It is a reminder of how politics changes, how the right to vote must not be taken for granted, and why everyone should register and vote for their chosen candidate.

That is a stunning fact, but averages always conceal as much as they reveal. A large number of consumers, about half, spend nothing on natural gas, since they do not use natural gas at their homes or businesses, and a much smaller number of consumers don't drink alcohol.

About 51% of consumers heat their property with natural gas, and those consumers spend more of their income on natural gas than 1%. But even for these consumers today's low gas prices minimize the hit to the pocketbook. Consumers heating with gas typically spend around $1,000 per year or about 2% of a median income families' income before taxes. The same family would have spent close to $2,000 or 4% of their pre-tax income, given the natural gas prices of 2008. Natural gas is certainly a tremendous bargain at this time.

Reason and facts often fall prey to passion. And Charles Koch passionately opposes wind power as well as President Obama, views that he recently advanced in a single op-ed on the perpetually wind-bashing, editorial pages of the Wall Street Journal.

In the September 10th Wall Street Journal, apparently realizing that electric rates are flat or down in most parts of the country, Koch wrote: "...the government is pushing up energy prices for all of us--five times as much as in the case of wind generated electricity."

No doubt that Koch and the WSJ editorial page believes that wind costs "five times as much." It, however, just is not so!

Michael Liebreich, Chief Executive of Bloomberg's New Energy Finance, dismantles Koch. Speaking of the "five times as much charge," Liebreich writes: "It is an extraordinary claim, with no evidence to support it. Bloomberg New Energy Finance's regular levelized cost calculations--based on real data from folk who build clean energy projects--show that wind energy is in many cases competitive with new-build coal capacity. Wind is also nearly competitive with new-build gas capacity if you use a gas price rising quickly to $4 and then on $6 per million British thermal units, as the future curve suggests you should, rather than the current spot price of $3." www.bnef.com/WhitePapers/view/130.

Koch and the WSJ have an ideological world view that they passionately advance and defend. In it, wind will always cost five times as much, no matter what it does in the real world. .

Tuesday, October 2, 2012

It seems every source of energy has critics determined to kill it. Wind energy is no different from natural gas in that important respect.

Like gas, no doubt exists that wind has weaknesses as well as strengths. But the partisan critics of wind that seek its demise exaggerate or outright concoct claims to justify their opposition. For example, some opponents of wind are fond of saying that the carbon or air pollution benefits of running wind turbines are erased by the need to operate increasing amounts of typically gas-fired back up power as the percentage of wind rises.

New actual, operational data from the UK again debunks the claim that more wind means as much or more carbon. Instead a study of actual data in the UK reveals that one more megawatt-hour of wind reduces total gas generation by about an equal amount. www.guardian.co.uk/environment/blog/2012/sep/26/myth-wind-turbines-carbon-emissions. Back-up generation systems are not erasing the carbon benefits of wind, even on a record wind production day.

In fact, the data includes a new record production day for wind in the UK, September 14th, when wind supplied 10% of the nation's power. On a typical day, wind provides 6% of the island nation's electricity, as compared to about 3% in the US.

The bottom line of the operational data in the UK is that the amount of carbon displaced rises with the amount of wind generated. Windy days mean less carbon in the UK system. And that again takes into account the emissions from back up generation!

Four hundred workers built Shepherds Flat, and it will provide $37 million per year in payments to state and local governments. Forty-five permanent positions were created to operate and maintain the wind farm. The zero-fuel cost facility is among the lowest production or operating cost (much less than 1 cent per kilowatt-hour) sources of electricity in the USA.

Zero fuel cost also means zero water consumption, zero water discharges, and zero-air pollution. The wind farm will avoid 1.483 million metric tons of carbon dioxide per year as well as considerable amounts of other air pollutants.

Though support for more regulation of fracking is down from stratospheric levels of 68% to 19% in March to a strong 56% to 29% today, the real message of the poll is that the American people do not believe that current regulation is adequate. And by a huge margin!

Also, the national numbers conceal regional differences. For example, support for more regulation in the Northeast is an overwhelming 69%.

Effective regulation requires strong rules, reasonable enforcement, and a genuine culture of safety embraced by all companies that compose the big, diverse gas industry. The American public is right that their is more work to do in making regulation of the gas industry better and smarter.

Ever since James Carville made famous in 1992 the political rallying cry, "It's the economy, stupid," everyone knows that the economy determines election outcomes and people vote their pocketbooks.

President Obama, however, will lose 5 to 8 of the 10 states (North Dakota, Nebraska, South Dakota, Oklahoma, Utah, Minnesota, Vermont, New Hampshire, Iowa, and Virginia) with the lowest unemployment rates, all of which have rates below 6%. Of those 10, the President is guaranteed to win only Minnesota and Vermont, with New Hampshire, Iowa, and Virginia among the 8 remaining battleground states.

Moreover, he will surely lose the three states with the lowest rates--North Dakota (3%), Nebraska (4%), and South Dakota (4.5%)--as well as Oklahoma, and Utah. So much for being rewarded for good economic times.

Yet, the President is favored to win the 3 states (Nevada, Rhode Island, and California) with the highest rates, all of which have rates above 10%. So much for being punished for bad economic times.

Carville's message to the Clinton campaign reflected his understanding that many things--demography, culture, and quality of candidates and campaigns--shape election outcomes as much as or more than the economy. Indeed, he insisted that a laser focus must be put on the economy, if more voters are to be persuaded to actually vote their pocketbooks.

About Me

I am an expert on energy, environment, green economy, competitive electric markets, and utility regulation with unique experience in and out of government. I am a Democratic candidate for Governor of PA. See www.hangerforgovernor.com. You can email me at john@hangerforgovernor.com. I have been both the Secretary of the Pennsylvania Department of Environmental Protection and Commissioner of the Pennsylvania Public Utility Commission. I have made leading regulatory decisions, testified to Congress and state legislatures, and been interviewed countless times, appearing on CBS evening News, NBC Evening New, CNN, BBC, CBC, and many more outlets. I am a 1984 graduate of the University of Pennsylvania and 1979 graduate of Duke University.